Biti proposes solutions to economic crisis

Former finance minister, Tendai Biti has proposed several measures to address the economic impasse, arguing that failure to embrace the community of nations was retrogressive.

Former finance minister, Tendai Biti
Former finance minister, Tendai Biti

Speaking at a public meeting organised by Crisis Coalition of Zimbabwe in Harare under the topic “Panacea to a cliff hanging economy or another burden to the already hard pressed citizens in a squeezed fiscus”, Biti condemned finance minister Patrick Chinamasa’s 2014 Mid Term Fiscal policy review.

“Chinamasa’s statement is null and void. He has to start afresh,” said Biti. “His policy statement is a reflection that you can rig an election but not an economy.”

According to the policy review statement, Chinamasa proposed to increase excise duty on diesel and petrol from 25 and 30 cents per litre to 30 and 35 cents per litre respectively, with effect from September 15.

Chinamasa removed foodstuffs, washing preparations and beverages goods from the Duty Free Certificate facility while a 25% levy on mobile handsets was imposed with effect from October 1.

Biti said there was need for the government to accept that the country was not performing and called on the ruling party to repeal the Indigenisation and Economic Empowerment Act as a starting point of promoting foreign direct investments (FDIs).

“Zimbabwe needs a holistic multi-faceted approach in dealing with the current economic impasse,” said Biti, proposing that government should strengthen the rule of law and complete the Constitutional agenda as incentives of attracting investment.

“Repeal and do not amend the Indigenisation and Economic empowerment Act. Let the experts come up with a broad based policy that attracts FDIs,” said Biti, proposing several strategies for adoption to improve the country’s economic performance.

“Government should resolve Zimbabwe's debt crisis to enable the country to access funds from international institutions such as the World Bank and the African Development Bank,” he said.

“We need to be fully integrated in the community of nations, and we must not restrict ourselves to the east only because we are a very small country which still needs the support of the international community.”

Biti called on government to stop ‘spoon feeding’ farmers with inputs and handouts and instead structure the agriculture sector as a business model.

“Solve the land question and stop farm invasions,” said Biti.

“Give land titles to the land owners and restore the land market to ensure that farmers can access funding from financial institutions,” said Biti, adding that the country was in dire need of macro-economic stability.

Patrick Zhuwao, an economist and Zanu (PF) representative at the meeting said it was wishful thinking for anyone in Zimbabwe to propose to government to repeal the indigenisation and economic empowerment act.

“The law will not be repealed,” said Zhuwao, adding that the MDC formations should have tabled this in parliament during the inclusive government.

Tapiwa Mashakada, MDC-T's former Economic Planning minister called on government to address the country’s socio- economic structure and adjust the fiscal policy accordingly.

Mashakada said unless the government addressed the current policy inconsistencies and improved the investment climate, investors would continue shunning Zimbabwe.

“The question is do we respect the agreements that we sign? Unless we play according to the rule of capital, no investor will put their money up for indigenisation,” said Mashakada.

Economist, Godfrey Kanyenze said the 2014 fiscal policy review was all about raising revenues and aimed at moving resources from high productivity areas to low productive ones.

“The economy has regressed and the country is in a serious debt,” said Kanyenze. “Revenues are decreasing while expenditure has increased.”

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